Cryptocurrency
Bitcoin’s Back! $9k Incoming?
Bitcoin’s back and has been on a tear this past week. Price has increased more than 20% in the past three days and the critical resistance level of $6k has been broken. Bitcoin topped at $7.6k and is now trading at $6.9k. A healthy pullback will likely take place before another exponential run will begin. […]
Bitcoin’s back and has been on a tear this past week. Price has increased more than 20% in the past three days and the critical resistance level of $6k has been broken. Bitcoin topped at $7.6k and is now trading at $6.9k. A healthy pullback will likely take place before another exponential run will begin. If Bitcoin does not pullback, the most important resistance level for the bulls is now $9.4k.
$9.4k Fibonacci Level
The chart above displays Bitcoin’s Fibonacci resistance levels. Bitcoin broke above the 0.236 Fibonacci level by increasing to a price of $7.5k. However, the 0.236 Fib level is not very significant. The most important Fib levels are 0.382 and 0.618. Therefore, Bitcoin will face heavy resistance at the 0.382 level at roughly $9.4k. If Bitcoin cannot break above the 0.382 Fib level, then a hard rejection will likely follow.
Gold In Similar Circumstances
Above is a chart of gold which peaked in 2011 and bottomed in 2016. Shortly after gold bottomed in 2016, price increased until it was rejected by the 0.382 Fibonacci level (red circle). A large pullback followed and gold remains under the 0.382 Fibonacci level to this day. Bitcoin now faces similar circumstances and must break above the 0.382 Fibonacci level or face a harsh pullback. That being said, Bitcoin and the cryptocurrency market move faster than gold and most traditional markets.
Shorts are Deleveraging
The chart above displays how a substantial amount of shorts were blown out of the market as price broke above key resistance levels.
RSI, BitMex Funding & Premium Index, & NVT Ratio
Bitcoin’s RSI is currently pulling back from a high of 90 and is now at 77. RSI is still in overbought territory. Below RSI is the BitMex funding and premium index. It is interesting that the index has switched from negative to positive yesterday, indicating that a trend reversal may be near. Below it is the NVT ratio. A high NVT tells us that Bitcoin is overvalued relative to the value being transacted on the blockchain. Each time this indicator has remained red for a significant period of time a substantial pullback has followed.
Conclusion
Bitcoin’s back for now but the market still needs a healthy pullback in order to establish a true higher low. Support remains at $6.4k, while Bitcoin’s next macro resistance level is $9.4k. A pullback following the Consensus Conference would present an excellent buying opportunity for any long-term hodlers preparing for the next market cycle.
Disclaimer: This should not be considered financial advice. I am not a financial adviser. Please do your own research and make objective decisions. The author of the article owns Bitcoin.